Thursday, 3 April 2014

Income and Wages Policy

Editor's note : A good editorial in the Daily Nation on an important issue. It is telling though that the Daily Nation believes that it has to quote the World Bank to substantiate a very basic point. It is a shame that 50 years after independence an opinion carries more weight when it is buttressed by foreign organisations and not poor ordinary Zambians. As I have repeatedly said Zambians have to learn to increasingly think for themselves if the country is to move forward. It would have made more sense to quote a Zambian education institution on these issues. Where are the academics?

Apart from all other negative influences that have driven the Kwacha into a free fall is the unmanageable wage award granted to public service workers which has driven the cost of Government beyond acceptable limits.

Close to 52 percent of Government expenditure is now being spent on personal emoluments of public service workers who are receiving salaries far in excess of employees in the private sector whose taxes fund the Government!

This has created a situation where there is very urgent need for the Government to institute a wages and incomes policy in order to bring sanity into the sector which has been bedeviled with huge disparities, some of them, totally outrageous.

The worst part is that public wages have outstripped the private sector by far.

This would have been acceptable if the wage increase was meant to change the public sector into a productive efficient and result oriented institution. This is not the case.

Instead we still have the same lethargic public service which is now costing the country even more, a whopping 52 percent of Government expenditure.

The World Bank has rightly weighed in on this matter and has noted that Government expenditure may not be reigned in for as long as the huge award remains outstanding- if anything public service unions are now agitating for the removal of the wage freeze!

The Government will find it very difficult to resist the pressure because precedence has already been set by the President and his constitutional Office holders who have increased their emoluments three times in the last two years and their wages are not modest by any stretch of the imagination.

The truth of the matter is that public sector institutions including donor supported organizations are now excelling in giving their workers lucrative conditions of service compared to the private sector which must struggle to earn every single kwacha.

This situation is not tenable. Sanity must be brought to bear and the only way this can be done is by instituting a wages and incomes commission that will ensure parity in wages while appreciating efficiency, grading of jobs and general performance in relation to national resource allocation.

The Government has a duty and responsibility to ensure that citizens are adequately compensated for their effort in the work place. This should include ensuring that public resources are treated with the requisite stewardship.

Our appeal is for Government to urgently institute measures that will cap and then spread incomes to take account of the national needs requirement. At the same timer compensation should be linked to performance and productivity.

The ordinary farmer in the village who toils to produce a bag of maize must receive adequate compensation equal to his effort, just as the office assistant in Government who earns about K2,000 a month.

Nobody will begrudge Government from rewarding its officers adequately to ensure the retention of qualifies and dedicated employees but this should not be at the expense of the entire economy as the case seems to be developing at the moment.

It would in fact have been more useful at the very beginning of the huge salary award that Government should have insisted that the salaries were tied to retention, motivation and indeed encouragement of e public service workers to enhance effectiveness in service delivery and improved productivity.

As it stands the wage increase was a political ploy that had no basis. The result however has been a dramatic shift in Government expenditure which has negative effects on the economy of the country.

3 comments:

Regional standards can be useful. In SADC I think the recommended standard on import cover is 6 months. A standard could be introduced on percentage of tax collected that could be paid on civil service wages. I think the Minister of Finance in his recent statement said that the percentage of salaries to government income had to be addressed as it was too high. Surely an inappropriate remark from the government that made it that way.

There is another way of looking at these statistics which is by the number of civil servants employed in the nation. 52 per cent of the government income is spent on x number of people. This also often tends to show the former figure is too high because the latter figure is only a small percentage of the population.

Another point is that government borrows to pay wages. Private business does not. This is why I favour balanced budgets or ones with minimal borrowing.

But this is not a uniquely Zambian problem. Kenyatta was saying the same about his own nation where the figure is 70 per cent. He said that it was strangling Kenya's development. Also recently it was reported in the UK that government workers are paid about 10 per cent more than private workers. They do less work there too. I think that it may be worthwhile considering a radical policy of making government workers salaries a percentage - no more than 100 per cent - of private sector employees. It cannot be reasonable that a man who pays the taxes gets less than the person who benefits from the taxes.

The problem with all of it is that it is an example of a powerful self-interest group harming national development. It may be better to cut the civil service. There will be personal suffering involved for the person who loses his job but it is for the national good. Also, other countries including Zimbabwe have different pay schedules depending on employer and those who are employed by the government get less.

One other point is that fragile states have no easy solutions to these problems. Such states seem continually to be on the edge. The reason often is historical. In the years after independence, often by patronage, the civil service gets bloated and they suffer from it for a long time. It is difficult to fix.

Interesting article, that points out the vacuums that surfacing in the public sector wage and service. I surely agree that the sector needs cleaning up, specially that public sector productivity is remain poor for some time. It would be cardinal to see a sound policy put in place to address the public sector and institutional performance.

PF Government has no incentive to reduce it's bloated civil service because doing so will render family members of most senior government officials and first family unemployed.

Districts (and a province) were created under the guise of devolving power but the truth is it was all patronage. A quick glance at officials recruited in most newly created districts and Muchinga Province tell the nepotism story and this has exacerbated the problem of incompetence in most government institutions. Incompetent officials cannot be relieved of their duties because they are family members of senior government officials, including the president. Sad but true.

All contributors should follow the basic principles of a productive dialogue: communicate their perspective, ask, comment, respond,and share information and knowledge, but do all this with a positive approach.

This is a friendly website. However, if you feel compelled to comment 'anonymously', you are strongly encouraged to state your location / adopt a unique nick name so that other commentators/readers do not confuse your comments with other individuals also commenting anonymously.

INVESTMENT OPPORTUNITIES

COPYRIGHT

DISCLAIMER

The Zambian Economist is a private website produced and maintained in my own time, and reflects solely my personal opinions. Statements published on the Zambian Economist do not represent the views or policies of employers, friends, family, past or present, or anyone I may or may not be associated with. Any view, opinion or information submitted in the comments section is the sole responsibility of the respective contributor or visitor to the site. These do not in any way represent the views of Zambian Economist nor can I be held responsible for them.